Manufacturers cite political uncertainty as a threat to business, says BER

by Mariam Isa,
November 29 2012, 16:20

Mariam Isa

Manufacturers cite political uncertainty as a threat to business, says BER

THE ratio of manufacturers rating the present uncertain political environment as a constraint on business activity has climbed to its highest since 1993, according to a survey from the Bureau for Economic Research (BER).

A detailed breakdown of its overall business confidence survey published last week showed that although confidence in the sector improved during the fourth quarter, it remained low, reflecting in part the labour unrest that has swept through the mining sector.

Manufacturing is the economy’s second-biggest sector, accounting for about 15% of overall economic activity and nearly 14% of employment. It expanded by 1.2% in the third quarter of this year after contracting by 0.8% in the previous quarter.

The BER manufacturing confidence index rose by five basis points to 38, but remained well below the level of 47 index points seen in the first quarter of 2012.

The ratio of respondents who saw the political backdrop as a threat to their business rose to 73 — its highest level since the third quarter of 1993.

Manufacturers expected a decline in fixed investment levels over the coming year, despite an improvement in perceptions of business conditions in a year’s time.

"The downscaling of investment plans is likely due to increased uncertainty," said BER economist Lisette IJssel de Schepper.

Export performance remained under pressure with both export sales and order volumes well below expectations.

"However, producers seemed to anticipate a recovery of the global economic environment (and possibly a continuation of a relatively weaker rand exchange rate) with a net majority expecting an increase in the volume of goods exported over the year," Ms IJssel de Schepper said.

Domestic demand was much stronger than expected, with indicators for sales and order volumes improving significantly in the fourth quarter.

THE ratio of manufacturers rating the present uncertain political environment as a constraint on business activity has climbed to its highest since 1993, according to a survey from the Bureau for Economic Research (BER).

A detailed breakdown of its overall business confidence survey published last week showed that although confidence in the sector improved during the fourth quarter, it remained low, reflecting in part the labour unrest that has swept through the mining sector.

Manufacturing is the economy’s second-biggest sector, accounting for about 15% of overall economic activity and nearly 14% of employment. It expanded by 1.2% in the third quarter of this year after contracting by 0.8% in the previous quarter.

The BER manufacturing confidence index rose by five basis points to 38, but remained well below the level of 47 index points seen in the first quarter of 2012.

The ratio of respondents who saw the political backdrop as a threat to their business rose to 73 — its highest level since the third quarter of 1993.

Manufacturers expected a decline in fixed investment levels over the coming year, despite an improvement in perceptions of business conditions in a year’s time.

"The downscaling of investment plans is likely due to increased uncertainty," said BER economist Lisette IJssel de Schepper.

Export performance remained under pressure with both export sales and order volumes well below expectations.

"However, producers seemed to anticipate a recovery of the global economic environment (and possibly a continuation of a relatively weaker rand exchange rate) with a net majority expecting an increase in the volume of goods exported over the year," Ms IJssel de Schepper said.

Domestic demand was much stronger than expected, with indicators for sales and order volumes improving significantly in the fourth quarter.

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